Yieldstreet Launches Funds To Stem Cash Crunch At Properties For Adam Neumann Startup Flow
Apartment startup Flow, the newest venture from WeWork founder Adam Neumann, is having income issues a little over a year into its lifespan, The Real Deal reported.
Yieldstreet has opened two funds on its crowdfunding platform to raise money for its share of expenses at properties "experiencing a cash flow deficit to meet its obligations," Yieldstreet’s website says. Flow is the general partner of the buildings, while Yieldstreet is the limited partner and majority equity holder.
The infusion of capital will be used for interest rate caps and operating costs.
One of the properties, Nashville's Stacks on Main, has been struggling since June to earn enough cash to cover even half of its floating-rate $60M mortgage. The second asset, Nashville's 2010 West End Ave., has a $121M mortgage, but there is no public data on its performance.
“As joint venture partners, Flow and Yieldstreet have invested in Nashville assets consistent with our joint investment strategy, which has included, among other things, upgrades and capital improvements,” a Flow spokesperson said to TRD.
Flow and Yieldstreet have not responded to Bisnow's request for comment.
Yieldstreet told investors in Stacks on Main not to expect much in the way of returns until the building sells down the road.
“Yieldstreet investors should not expect to receive distributions given the current market dislocation and the need to conserve cash to support the property,” the website for the building’s fund says.
Neumann's family firm, Nazare, dropped $79M in 2021 for Stacks on Main. To date, Nazare has spent $4.5M in additional cash and investors have contributed $925K. Nazare has put an additional $22M in 2010 West End since buying it for $158M in 2022.
In 2022, having been ousted from the now-bankrupt WeWork, Neumann created Flow, "a chance to turn traditional apartment living into a community with shared experiences," lead investor a16z said.
While details on the business model have been kept under wraps, Flow became a billion-dollar company before its first property opened with a $350M investment, the largest in backer Anderseen Horowitz's history.
Flow manages $2B in assets with 4,000 units, according to Yieldstreet and reported by The Real Deal.
CORRECTION, JAN. 16, 9:20 P.M. ET: The headline has been updated to make clear the new funds are targeting specific properties, not Flow itself. The story has also been updated to clarify that the new funds are to cover Yieldstreet's share of capital requirements.
